Entrepreneurs often make up in enthusiasm what they lack in business experience, but passion alone is not enough to ensure the success of a startup. If you’re starting a new business, you need to watch for the following six legal snares that could potentially sink your startup:
- Lease agreements. A commercial lease is much different than a residential lease, and unlike renting an apartment, renting office space is something that should be negotiated. There are clauses in commercial leases that could make you responsible for a share of the building’s operating expenses, or use restrictions that may limit how your business can grow.
- Entity selection. Choosing how you will structure your business legally and financially should not be done without the help of a Creative Business Lawyer™, who can help you understand the advantages and disadvantages of operating as a sole proprietorship, limited liability company (LLC) , S-corporation, C-corporation or partnership. Putting the wrong structure in place could cost you plenty to unwind it if it doesn’t support the growth of your business.
- Partnership agreement. If you have a partner in your new venture, you will need a partnership agreement that spells out how profits and losses are allocated and other important issues to create a viable framework for operating the business.
- Intellectual property. Every business will have some type of intellectual property to protect via a patent, trademark or copyright. However, before you throw money at IP protection, consult with an attorney to determine the right IP strategy considering what needs to be protected and the financial resources you have available.
- Insurance. Typically, you will likely need general liability insurance as well as property insurance for your new business. Depending on the nature of your business, the officers and directors of your company may also need insurance to protect them from business liability (D&O insurance). You will need to check your lease agreement for any insurance requirements as well.
- Employment Matters. Your biggest risk in business often comes from working with your own team. You will need to be familiar with both state and federal employment laws that will govern your relationship with employees and independent contractors.
One of our primary services is a LIFT Start-Up Session, in which we guide you through the right choice of business entity, location of business entity, start up agreements, intellectual property protection, employment structuring, insurance, financial and tax systems you need to start your next business and succeed right out of the gate. This session is normally $5,000, but if you are one of the first three people to schedule, we’ll take you through the entire LIFT Start-Up process for half that investment.
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